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How Transparency Will Win Consumer Trust Online

Posted on June 16, 2010
by Chief Marketer Staff

Marketers have been talking for years about “transparency.” But what does it mean in real terms?

Online, it means that you will soon have to reveal why and how you are targeting a consumer with an ad. That, like it or not, is about to become the standard for behavioral advertising, said Frannie Danzinger, senior vice president, Media, North America for GyroHSR, speaking yesterday at Digital Marketing Days in New York.

Yahoo has been doing this since the first quarter “across all its Class One stuff,” Danzinger said. Here how it works: When Yahoo serves an ad to a consumer, either in response to a search or other behavior, the person sees a button: “Ad Choices: Learn More About This Ad.” And when they click through, they find answers to these questions:

* Who placed this ad?

* Where can I learn more about how Yahoo selects ads?

* What choices do I have about interest-based advertising from Yahoo?

According to Danzinger, the person learns why they were served the ad, and how they became part of that target audience. And the consumer can “dig deeper to understand why they received this” with an additional questions.”

Some marketers may not want a prospect to know all that. But there are signs it reduces suspicion of targeting.

For example, a recent study showed that transparency and choice greatly increased “the percentage of those who were comfortable with behavioral advertising,” Danzinger said.

In addition, the study found that 30% are neutral about behavioral ads with or without transparency. That’s a big percentage “that could swing either way,” she added.

Transparency also reduces “ad blindness,” Danzinger continued. “People are more engaged with the ad, and can see that there are choices.” In the future, transparency will move “behavioral advertising from a social ill to a social norm.”

Meanwhile, fears about privacy are chilling online investment.

Of 90 companies surveyed by Ponemon Institute, 98% said they have restricted online behavioral advertising (or OBA) because of privacy concerns. As Larry Ponemon recently wrote in a blog post, “that curtailment has kept more than $600 million out of the behavioral targeting industry. At the same time, 63% said OBA provides their greatest return on investment.

Here’s more proof. U.S. users spend 12 hours online per week, 32% of their media time, but online advertising comprises only 13.6% of the U.S. advertising spend, added Russell Glass, chief executive officer of Bizo Inc. The money is not following the consumption patterns, and this is due, in part, to fears about brand safety and privacy.

Do consumers know about Ad Choices? Not yet, but the major networks have agreed to the standard, and disclosure will eventually be included with all ads from all media vendors, Danzinger said.

Ray Schultz is the former editorial director of the Chief Marketer Network.